The Resurgence in REITs' At-the-Market Offerings and Its Implications for Investors

The resurgence of at-the-market (ATM) offerings among U.S. Real Estate Investment Trusts (REITs) in 2025 underscores a strategic shift in capital structure optimization and market access. These programs, which allow REITs to issue shares continuously at prevailing market prices, have become a cornerstone of liquidity management, particularly in a landscape marked by evolving interest rates and sector-specific challenges. For investors, understanding the mechanics and implications of this trend is critical to navigating the REIT sector’s evolving dynamics.

Capital Structure Optimization: Flexibility and Efficiency

According to a report by S&P Global Market Intelligence, U.S. REITs raised $4.85 billion through ATM programs in Q2 2025, a 50.7% increase year-over-year but a 3.9% decline from the prior quarter [1]. This resilience reflects REITs’ strategic use of ATM programs to balance debt, fund growth, and maintain financial flexibility. For instance, healthcare REIT Welltower Inc. raised $1.99 billion via ATM in Q2 2025, leveraging the tool to deleverage its balance sheet and finance high-demand healthcare assets [1].

The efficiency of ATM programs lies in their cost structure. Commission rates typically range between 50–100 basis points, significantly lower than traditional underwritten offerings, which often exceed 3–5% [2]. This cost advantage, combined with the ability to scale capital raises based on market conditions, has made ATM programs a preferred vehicle for REITs. Larger REITs (market caps above $10 billion) typically size their ATM programs at 5–6% of market capitalization, while smaller and midcap REITs allocate 8–12% [2]. This calibrated approach minimizes market disruption and avoids signaling distress, a concern that has historically plagued dilutive capital raises.

Market Access: Expanding Syndicates and Strategic Execution

The expansion of ATM syndicates has further enhanced REITs’ access to capital. As noted in a 2025 analysis by Goodwin Procter, REITs now commonly include 15+ broker-dealers in their ATM programs, many of which overlap with their debt syndication networks [2]. This integration not only broadens execution flexibility but also deepens institutional engagement, potentially improving research coverage and investor confidence. For example, American Healthcare REIT’s $1 billion ATM offering in late 2024 was supported by a diverse syndicate, enabling the company to secure favorable pricing while aligning with its debt refinancing goals [3].

Strategic sizing and transparency are equally vital. REITs that communicate clear use-of-proceeds plans—such as debt reduction, capital expenditures, or strategic acquisitions—tend to see less market volatility. In Q2 2025, single-tenant retail REITs raised $791 million via ATM, with proceeds directed toward refinancing maturing debt and expanding high-credit-tenant portfolios [1]. Such disciplined deployment reinforces investor trust and mitigates concerns about overhang.

Investor Implications: Returns, Risks, and Sector Dynamics

For investors, the proliferation of ATM programs presents both opportunities and risks. On the positive side, REITs utilizing ATM proceeds for growth or deleveraging can enhance risk-adjusted returns. JPMorgan analysts estimate that REITs may deliver ~10% total returns in 2025, driven by 4% dividend yields and low-to-mid-single-digit FFO growth [4]. However, sectors with weaker fundamentals—such as industrial and office REITs—remain vulnerable to economic headwinds, as evidenced by industrial REITs’ 17.7% negative return in 2024 [3].

The defensive characteristics of REITs, particularly in multifamily and healthcare, offer a counterbalance. These sectors have historically outperformed during market downturns due to stable cash flows and long-term leases. For instance, multifamily REITs like Camden Property Trust and AvalonBay Communities have leveraged ATM programs to fund development pipelines while maintaining high dividend yields [4].

Conclusion: A Strategic Tool in a Dynamic Market

The resurgence of ATM programs highlights REITs’ adaptability in optimizing capital structures and accessing liquidity. While these programs are not without risks—such as short-term volatility or overhang—their strategic execution, coupled with transparent communication, can enhance long-term value. For investors, the key lies in differentiating between REITs that use ATM proceeds judiciously and those that rely on dilution without clear growth justification. As the REIT sector navigates 2025’s macroeconomic uncertainties, ATM programs will remain a critical tool for balancing flexibility, cost efficiency, and investor confidence.

**Source:[1] US REITs raise $4.85B through at-the-market programs in Q2 2025 [https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/9/us-reits-raise-485b-through-atthemarket-programs-in-q2-2025-92203146][2] Recent Developments in the Use of “At-the-Market” Offering Programs by REITs [https://www.goodwinlaw.com/en/insights/publications/2025/05/alerts-realestate-recent-developments-in-the-use-of-at-the-market][3] American Healthcare REIT's $1 Billion ATM Offering [https://www.ainvest.com/news/american-healthcare-reit-1-billion-atm-offering-strategic-move-capital-structure-optimization-shareholder-creation-2508/][4] Inside REITs: Will Growth Ramp Up? - Real Estate [https://www.jpmorgan.com/insights/global-research/real-estate/inside-reits]